Silver: $SLV

Anyone who has been long silver in the last 18 months has been suffering. My quick technical analysis of the weekly chart shows a few things:

1. The recent breakout above the descending trendline at $28 has not been confirmed with volume.

2. Long term support is $26, that's where buyers have shown up as far back as Jan 2011

3. Sellers have come in before at $34

If you are a trader, then long positions should be suspect without a breakout above $34 ON VOLUME.

If you are a long term holder, any significant break below $26 should signal trouble.

If you bought silver in the last year, well what can I say?

Elliott Wave Update

Daily SPY with Elliot Wave Counts

This is an update from last week's Elliot analysis.

Downward impulse from April took 8 weeks but finished with the A-B-C which began the first week of June.  Large volume sell-offs yesterday and today seem to portend the start of another downward impulse (Orange line).

June lows of 127-ish come into play and should be strong support for a wave 2 to start.

Elliot Waves

OK, Elliot waves have become old-fashioned and few traders look at them anymore. Here are the counts as I see then recent downward impulse. We have completed the A-wave corrective and are likely about to see how low the B-corrective will be.

Voo-doo. The Elliot Waves are usually only apparent to me after they are completed and I find them useless for trading. The low sentiment and oversold technicals from last week are pretty much played out. My guess is that we trade in a low volume range here .

Muddle.

Rising Wedge-- bearish?

Notations on chart, click to enlarge

I'm still net long in my trading account, but have instituted hedges with QID and DZZ.  Other holdings include long positions in UNG, CVX, X and TBT (short Treasuries). All are swing trades for a week or more.

Kimberly Clark (KMB) Wolfe wave

Kimberly Clark (KMB) is a swing trade I've been holding since the August lows but now it seems to be getting ahead of itself. Here is the exit strategy and even a short set-up if the market swoons. Wolfe waves are elegant when they work and this one is a classic set up.

My cost basis is 65.29 and I set my sell-stop on the long position at 70.50 (white trend line). The short set-up is good only for the next few trading sessions on this test of top. If KMB drops below the red trend line then I'll enter a short with a target at the green line or Oct 23rd, whichever comes first. There's a chance that KMB takes off to the upside in which case I'll ride it. If it pulls back it may just trade in a range between the white and red lines in which case I won't have a position. This strategy takes patience but feels great when it works...ie, a fun vanity trade.

Is sentiment too high for gold?

Marc Faber has been bullish on gold for a long time and I've followed him into GLD as well, but now he's calling for gold to hit $10,000. Sentiment is as high as ever now. The inflation adjusted high form the 1970's is $2200.

One aside on this video, as pessimistic as Faber has been on the world economy (and history as proven him correct), he says that he is "not a heavy short-seller" and states his wealth is divided in equal quarters of 1) stocks, 2) gold/silver, 3) real estate and 4) cash. Not bad advice, although I think it's time to take some gold and US Treasuries off the table.. the risk-off trade is getting overdone.

SPY technically oversold

...and due for a (little) bounce. No question, there are structural problems in the macroeconomy and some major technical damage to the indices, but bears would do well to claim a small victory, take some profits and either go to the sidelines or reverse gears for a day or two.



It's time to get your list ready of stocks you want to own: GS, MSFT, PFE, KMB are some safe names. The last two have dividends larger than the 10-year Treasury. Even MCD and PEP have yields that are safe, although their stock price may pull back. For more aggressive investors, HCN, FTR, NLY are high yielders.

Remember that company earnings are still healthy regardless of what employment and other economic indicators may say.

Don't listen to me, these are not recommendations to buy or sell anything.